Medicare and Medi-Cal Liens on a California Injury Settlement

By the FigureMyTax Editorial Team · How we calculate

Medi-Cal may recover only the portion of your settlement that represents medical care, and its lien is reduced by 25 percent for attorney fees plus a share of litigation costs. Medicare recovers under federal law.

Medi-Cal's right to recover

When Medi-Cal benefits are provided because of an injury for which another party or a UM carrier is liable, the Director of Health Care Services has a right to recover the reasonable value of the benefits (Welf. & Inst. Code 14124.71). "Reasonable value" is generally the Medi-Cal rate of payment for the services (14124.70).

Limited to the medical portion

Section 14124.76 says recovery of the Director's lien from your claim is limited to the portion of a settlement, judgment or award that represents payment for medical expenses or care provided on your behalf. All reasonable efforts must be made to obtain the Director's advance agreement on that portion; absent agreement, a court decides, guided by the U.S. Supreme Court's decision in Arkansas Department of Health and Human Services v. Ahlborn (2006). Either side may file a motion, and you may appeal the final decision.

The 25 percent reduction

If you alone bring the claim and owe attorney fees and costs, the lien that is reimbursed is reduced by 25 percent, which represents the Director's reasonable share of attorney fees, and by a share of litigation expenses equal to the actual expenses multiplied by the ratio of the lien amount reimbursed (before fees and expenses) to the full settlement (14124.72(d)). On a $100,000 settlement with $3,000 of costs, a $20,000 lien on a $40,000 medical portion becomes $20,000 × 0.75 = $15,000, less $3,000 × 20% = $600, so $14,400. The California medical lien calculator applies these steps.

Notice and settlement

Whoever brings the action or claim must give the other written notice within 30 calendar days of filing (14124.73), and no settlement is final without first giving the Director notice and a reasonable opportunity to perfect and satisfy the lien (14124.76(a)). A provider that has been paid by Medi-Cal may file its own lien only if it has fully reimbursed Medi-Cal, limited to its fees less 25 percent (14124.791).

Medicare

Under the Medicare Secondary Payer statute, 42 U.S.C. 1395y(b)(2), the United States may bring an action to recover conditional payments and may collect double damages from responsible entities; 42 CFR 411.24 governs recovery. When Medicare's payments are less than the settlement, 42 CFR 411.37(c) reduces its recovery by its share of procurement costs. On a $100,000 settlement with $36,333 of fees and costs, $15,000 of Medicare payments would shrink to about $9,550.

Next steps

Compare hospital liens and health plan claims and read how California caps health plan liens before you answer any lienholder.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how California's rules apply to your specific case with a licensed California attorney.